Illinois Gov. Pat Quinn wants to keep higher income tax

Wednesday

Mar 26, 2014 at 7:38 AMMar 26, 2014 at 8:40 PM

By Sophia Tareen and Kerry LesterThe Associated Press

SPRINGFIELD — Gov. Pat Quinn said making Illinois’ temporary income tax increase permanent should prevent “extreme and radical” state budget cuts, a politically difficult trade-off that’s likely to be a major issue during his tough re-election bid.

The Chicago Democrat tied his push for extending the increase to relief for homeowners, saying he’d like to guarantee every Illinoisan who pays property tax a $500 annual refund. He also used his budget address Wednesday to call for increasing the earned-income tax credit for low-income families.

But the ideas — particularly the tax extension — give Quinn’s Republican challenger, Bruce Rauner, fodder to attack him and set up what’s expected to be a tough budget battle heightened by election-year scrutiny.

Still, Quinn predicted dire cuts without the extension. And Democrats, who control the Illinois House and Senate, said they’d support the move.

“If action is not taken to stabilize our revenue code, extreme and radical cuts will be imposed on education and critical public services,” Quinn said in the 30-minute speech to legislators. “Cuts that will starve our schools and result in mass teacher layoffs, larger class sizes and higher property taxes.”

The question of what to do with the income tax increase has nagged lawmakers and candidates. Polls show that most Illinois voters would rather cut spending than increase revenue.

Rauner and his fellow Republicans immediately blasted Quinn’s proposal, saying he went back on his word because the 67 percent income tax increase approved in 2011 was billed as temporary.

“After five years of Pat Quinn’s failed leadership, we have record tax hikes, outrageously high unemployment, massive cuts in education, and there’s still a giant budget mess in Springfield,” the Winnetka businessman said in a statement.

“We can balance the budget without more tax increases, if we create a growth economy, and restructure and reform our broken government.”

Other top Republicans said Quinn didn’t address the state’s high unemployment or go far enough on other fiscal issues, like paying down the backlog of bills.

Illinois will see a $1.6 billion revenue dip if the tax increase rolls back in January as scheduled. For weeks, state agency officials have been predicting dire cuts if that happens.

Without the increase, Quinn said, about 13,000 teachers would be laid off, among other cuts.

Maintaining the tax rate would be a “hard choice,” but he vowed to not institute new taxes on “everyday services.” He said he’d like to again increase the state’s earned-income tax credit, to help poor families keep more of what they earn, over the next few years.

Democrats credited Quinn, who is seeking a second full term, with taking a bold step.

“I would commend the governor for his political courage and honesty, unlike previous governors,” House Speaker Michael Madigan told the public television show “Illinois Lawmakers.” “He told the truth. He laid the cards on the table. If we wish to continue to provide the level of services we’ve become accustomed to education and other services, then the tax increase should be extended.”

Still, Quinn’s budget proposes an increase in spending.

Budget documents show a $36.8 billion state spending plan, including more for education, public safety and courts if the extension is in place. That’s 4 percent over last year, when lawmakers approved a $35.4 billion budget.

Budget director Jerry Stermer said part of the increase addresses rising costs. He said Illinois is still saving money from Quinn’s past decisions, including closing state facilities, a renegotiated union contract and a Medicaid overhaul.

Republicans and business groups have vowed to fight any extension of the temporary income tax hike and claim that testimony from state agency officials predicting dire cuts has been overblown to justify keeping it. They’ve called for cutting spending and limiting new programs.

Quinn briefly recapped his signing of a landmark pension overhaul, which he’s called one of his biggest accomplishments. But the proposed budget won’t contain the estimated savings. The overhaul that cuts benefits for state employees and retirees is undergoing a legal challenge by unions that say it’s unconstitutional.

Republicans said they had hoped for Quinn to address the state’s issues. House Minority Leader Jim Durkin called Quinn’s speech “rhetoric” that didn’t mention how to combat high unemployment.

“I would have hoped to have heard something of how we can do that, how we can turn that tide other than we’re going to tax, tax, tax,” he said. “I don’t believe that we can tax our way to prosperity.”

Lawmakers must approve a budget for the new fiscal year, which starts July 1, by the end of May.

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.